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The emergence of audit data analytics in existing audit spaces: findings from three technologically advanced audit and assurance service markets

Michael Kend (School of Accounting, Information Systems and Supply Chain, RMIT University, Melbourne, Australia)
Lan Anh Nguyen (School of Accounting, Information Systems and Supply Chain, RMIT University, Melbourne, Australia)

Qualitative Research in Accounting & Management

ISSN: 1176-6093

Article publication date: 13 April 2022

Issue publication date: 21 October 2022

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Abstract

Purpose

The purpose of this exploratory study is to better understand the interactions between external auditors, their audit clients and audit regulators when considering the supply of and demand for high-level audit technology. The authors examine the developed markets of Australia, New Zealand and the UK to better understand: how high-level audit technology has started to become embedded into existing audit spaces and any emerging issues this technology has created for the audit profession.

Design/methodology/approach

Through the theoretical lens of the socio-technical (ST) systems of innovation theory, the present study involved semi-structured interviews with 25 stakeholders in Australia and New Zealand from 2019 to 2020 and 21 stakeholders in the UK from 2016 to 2018.

Findings

Advancements are revitalizing the technologies of not only the external auditors and their firms but also of their audit clients. Although the audit model is changing, external auditors are reported to be reluctant to fully engage with new audit technologies. In this setting, the authors find audit rules are yet to become embedded in the objects or practices of ST systems and that keeping up with the pace of change for regulators and standard setters is a major challenge.

Practical implications

The findings of this study raise call for regulators to be more up to speed with these new technological changes, as audit standards need to be amended accordingly. Although the International Auditing and Assurance Standards Board deliberates, both clients and auditors need to lobby for specific audit data analytics regulations.

Originality/value

The present study provides perspectives about new audit practices that emerge due to high-level technological advancements and then embed themselves into existing audit spaces. The authors draw on several different stakeholder groups, not just the Big Four firms. The ST systems theoretical lens we adopt better helps us understand how audit firms at the organisational level are adapting to these new technological changes in existing audit spaces.

Keywords

Acknowledgements

Thank you to Dr Tarek Rana from RMIT University for his helpful comments. Thank you to Dr Ilias Basioudis from Aston Business School for his assistance and contacts during some of the data collection stages in the UK. The authors gratefully acknowledge the comments of the two anonymous reviewers and the editor. Last, but not least, we thank all our interviewees for supporting this study.

Funding: The author(s) received no financial support for the research, authorship and/or publication of this article.

Citation

Kend, M. and Nguyen, L.A. (2022), "The emergence of audit data analytics in existing audit spaces: findings from three technologically advanced audit and assurance service markets", Qualitative Research in Accounting & Management, Vol. 19 No. 5, pp. 540-563. https://doi.org/10.1108/QRAM-01-2021-0005

Publisher

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Emerald Publishing Limited

Copyright © 2022, Emerald Publishing Limited

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